2026 UPDATED QUESTIONS DOWNLOAD
Ultimate WGU D102 Financial Accounting Mastery Exam: 150
Comprehensive Q&A with Verified Rationales (2026-2027 Edition)
This definitive study resource features 150 original practice questions specifically
designed to mirror the WGU D102 Objective Assessment, covering the complete
accounting cycle from journal entries to financial statement preparation. Each question
includes a verified correct answer and detailed professional rationale, ensuring
mastery of high-yield topics like FIFO/LIFO inventory, bank reconciliations, and cash
flow analysis. Perfect for students aiming for a distinction, this guide simplifies
complex GAAP principles into a scannable, exam-ready format that guarantees a
deeper understanding of financial mechanics.
1. Which of the following accounts has a "Normal Debit" balance?
A. Accounts Payable
B. Service Revenue
C. Prepaid Rent
D. Common Stock
Answer: C
Rationale: Remember DEAD (Debits increase Expenses, Assets, and Dividends).
Prepaid Rent is an Asset; therefore, its normal balance is a Debit.
2. If a company purchases equipment for $5,000 on account, how does this affect
the Accounting Equation?
A. Assets increase $5,000; Equity increases $5,000
B. Assets increase $5,000; Liabilities increase $5,000
C. Assets decrease $5,000; Liabilities increase $5,000
D. No effect on the equation
Answer: B
Rationale: Equipment (Asset) goes up, and Accounts Payable (Liability) goes up.
The equation (
,2026 UPDATED QUESTIONS DOWNLOAD
) remains in balance.
3. Which financial statement is prepared for a specific "point in time" rather than
a period of time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Rationale: The Balance Sheet is a "snapshot" of a company’s financial position on a
specific date. All others cover a duration (month/year).
4. A company receives $1,200 in advance for services to be performed next year.
The journal entry today is:
A. Debit Cash $1,200; Credit Service Revenue $1,200
B. Debit Cash $1,200; Credit Unearned Revenue $1,200
C. Debit Unearned Revenue $1,200; Credit Cash $1,200
D. Debit Accounts Receivable $1,200; Credit Service Revenue $1,200
Answer: B
Rationale: Since the work hasn't been done, it is a Liability (Unearned Revenue).
Cash is received (Asset increase).
5. What is the primary purpose of "Adjusting Entries"?
A. To correct errors made during the month
B. To close out temporary accounts
C. To ensure the Revenue Recognition and Matching principles are followed
D. To prepare the bank reconciliation
Answer: C
Rationale: Adjusting entries bring accounts up to date at year-end so that revenues
and expenses are recorded in the period they occurred.
6. Which of these is a "Temporary Account" that must be closed at the end of the
period?
A. Accounts Receivable
B. Dividends
,2026 UPDATED QUESTIONS DOWNLOAD
C. Accumulated Depreciation
D. Retained Earnings
Answer: B
Rationale: Revenues, Expenses, and Dividends (RED) are temporary. Assets,
Liabilities, and Equity (including Retained Earnings) are permanent.
7. When closing an Expense account, which of the following is the correct entry?
A. Debit the Expense; Credit Retained Earnings
B. Debit Income Summary; Credit the Expense
C. Debit Retained Earnings; Credit Cash
D. Debit the Expense; Credit Income Summary
Answer: B
Rationale: Expenses have a normal debit balance. To "close" them (bring to zero),
you must Credit the Expense and move the balance to Income Summary.
8. Under the Accrual Basis of accounting, when is Revenue recognized?
A. When the cash is collected
B. When the contract is signed
C. When the service is performed or the good is delivered
D. At the end of the fiscal year
Answer: C
Rationale: Accrual accounting recognizes revenue when it is earned, regardless of
when cash changes hands.
9. What is the formula for "Straight-Line Depreciation"?
A. (Cost + Salvage Value) / Useful Life
B. (Cost - Salvage Value) / Useful Life
C. Cost / Salvage Value
D. Book Value × Depreciation Rate
Answer: B
Rationale: Depreciation spreads the "depreciable base" (Cost minus what you can
sell it for later) over its working life.
10. "Accumulated Depreciation" is what type of account?
A. Liability
B. Expense
, 2026 UPDATED QUESTIONS DOWNLOAD
C. Contra-Asset
D. Equity
Answer: C
Rationale: It is an asset account that carries a normal Credit balance and reduces
the "Book Value" of the associated asset.
11. Which inventory method assumes the newest items purchased are
the first ones sold?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO assumes the most recent inventory costs are matched against
current revenues.
12. In a period of rising prices (inflation), which inventory method results in
the lowest Net Income?
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO uses the newest (more expensive) costs for Cost of Goods Sold
(COGS), which lowers profit and reduces taxes.
13. Which of the following is an "Internal Control" related to Cash?
A. Maximizing the amount of cash on hand
B. Allowing one person to handle both cash receipts and record-keeping
C. Monthly Bank Reconciliations
D. Keeping the safe combination on a sticky note
Answer: C
Rationale: Reconciling the bank statement to the books ensures that all
transactions are accounted for and errors/fraud are caught.
Ultimate WGU D102 Financial Accounting Mastery Exam: 150
Comprehensive Q&A with Verified Rationales (2026-2027 Edition)
This definitive study resource features 150 original practice questions specifically
designed to mirror the WGU D102 Objective Assessment, covering the complete
accounting cycle from journal entries to financial statement preparation. Each question
includes a verified correct answer and detailed professional rationale, ensuring
mastery of high-yield topics like FIFO/LIFO inventory, bank reconciliations, and cash
flow analysis. Perfect for students aiming for a distinction, this guide simplifies
complex GAAP principles into a scannable, exam-ready format that guarantees a
deeper understanding of financial mechanics.
1. Which of the following accounts has a "Normal Debit" balance?
A. Accounts Payable
B. Service Revenue
C. Prepaid Rent
D. Common Stock
Answer: C
Rationale: Remember DEAD (Debits increase Expenses, Assets, and Dividends).
Prepaid Rent is an Asset; therefore, its normal balance is a Debit.
2. If a company purchases equipment for $5,000 on account, how does this affect
the Accounting Equation?
A. Assets increase $5,000; Equity increases $5,000
B. Assets increase $5,000; Liabilities increase $5,000
C. Assets decrease $5,000; Liabilities increase $5,000
D. No effect on the equation
Answer: B
Rationale: Equipment (Asset) goes up, and Accounts Payable (Liability) goes up.
The equation (
,2026 UPDATED QUESTIONS DOWNLOAD
) remains in balance.
3. Which financial statement is prepared for a specific "point in time" rather than
a period of time?
A. Income Statement
B. Statement of Retained Earnings
C. Balance Sheet
D. Statement of Cash Flows
Answer: C
Rationale: The Balance Sheet is a "snapshot" of a company’s financial position on a
specific date. All others cover a duration (month/year).
4. A company receives $1,200 in advance for services to be performed next year.
The journal entry today is:
A. Debit Cash $1,200; Credit Service Revenue $1,200
B. Debit Cash $1,200; Credit Unearned Revenue $1,200
C. Debit Unearned Revenue $1,200; Credit Cash $1,200
D. Debit Accounts Receivable $1,200; Credit Service Revenue $1,200
Answer: B
Rationale: Since the work hasn't been done, it is a Liability (Unearned Revenue).
Cash is received (Asset increase).
5. What is the primary purpose of "Adjusting Entries"?
A. To correct errors made during the month
B. To close out temporary accounts
C. To ensure the Revenue Recognition and Matching principles are followed
D. To prepare the bank reconciliation
Answer: C
Rationale: Adjusting entries bring accounts up to date at year-end so that revenues
and expenses are recorded in the period they occurred.
6. Which of these is a "Temporary Account" that must be closed at the end of the
period?
A. Accounts Receivable
B. Dividends
,2026 UPDATED QUESTIONS DOWNLOAD
C. Accumulated Depreciation
D. Retained Earnings
Answer: B
Rationale: Revenues, Expenses, and Dividends (RED) are temporary. Assets,
Liabilities, and Equity (including Retained Earnings) are permanent.
7. When closing an Expense account, which of the following is the correct entry?
A. Debit the Expense; Credit Retained Earnings
B. Debit Income Summary; Credit the Expense
C. Debit Retained Earnings; Credit Cash
D. Debit the Expense; Credit Income Summary
Answer: B
Rationale: Expenses have a normal debit balance. To "close" them (bring to zero),
you must Credit the Expense and move the balance to Income Summary.
8. Under the Accrual Basis of accounting, when is Revenue recognized?
A. When the cash is collected
B. When the contract is signed
C. When the service is performed or the good is delivered
D. At the end of the fiscal year
Answer: C
Rationale: Accrual accounting recognizes revenue when it is earned, regardless of
when cash changes hands.
9. What is the formula for "Straight-Line Depreciation"?
A. (Cost + Salvage Value) / Useful Life
B. (Cost - Salvage Value) / Useful Life
C. Cost / Salvage Value
D. Book Value × Depreciation Rate
Answer: B
Rationale: Depreciation spreads the "depreciable base" (Cost minus what you can
sell it for later) over its working life.
10. "Accumulated Depreciation" is what type of account?
A. Liability
B. Expense
, 2026 UPDATED QUESTIONS DOWNLOAD
C. Contra-Asset
D. Equity
Answer: C
Rationale: It is an asset account that carries a normal Credit balance and reduces
the "Book Value" of the associated asset.
11. Which inventory method assumes the newest items purchased are
the first ones sold?
A. FIFO (First-In, First-Out)
B. LIFO (Last-In, First-Out)
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO assumes the most recent inventory costs are matched against
current revenues.
12. In a period of rising prices (inflation), which inventory method results in
the lowest Net Income?
A. FIFO
B. LIFO
C. Weighted Average
D. Specific Identification
Answer: B
Rationale: LIFO uses the newest (more expensive) costs for Cost of Goods Sold
(COGS), which lowers profit and reduces taxes.
13. Which of the following is an "Internal Control" related to Cash?
A. Maximizing the amount of cash on hand
B. Allowing one person to handle both cash receipts and record-keeping
C. Monthly Bank Reconciliations
D. Keeping the safe combination on a sticky note
Answer: C
Rationale: Reconciling the bank statement to the books ensures that all
transactions are accounted for and errors/fraud are caught.
